Sterling was steady against the euro and held above one-month lows against the dollar on Tuesday after weak UK consumer price data failed to shift the market's focus away from an expected US interest rate rise. Britain's CPI inflation rate came in at an annual 1.6 percent in February, below the Bank of England's 2.0 percent target, fuelling market expectations that an imminent Bank of England interest rate hike was unlikely.
Analysts had expected the CPI index to rise 1.7 percent in February, slightly up from a 1.6 percent reading in January.
"The data's weighed on sterling a little bit but we are talking fairly marginal moves today," said Lee Ferridge, senior proprietary trader at Rabobank.
By 1538 GMT, sterling was up 0.15 percent against the dollar at $1.9002, having fallen on Monday to a one-month low at $1.8940. The pound was down 0.15 percent against the euro at 69.50 pence.
Ferridge said sterling would take direction from the reaction of the euro/dollar rate after the Federal Reserve's decision on US interest rates at 1915 GMT.
The Fed is widely expected to raise US interest rates by a quarter point to 2.75 percent in its seventh consecutive hike. Some expect it could hint at a more aggressive stance by removing previous references to raising rates at a "measured" pace.
In Britain, minutes of the latest monetary Policy Committee meeting are due on Wednesday and investors will be looking for clues on the UK interest rate outlook.
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